Thursday, October 30, 2008

Plutocracy Shrugged?, Or, Spreading the Wealth Around

Just a pre-election blur . . .

Remember all that jazz on ATL a few months ago about how, if when Obama is elected President and enacts his tax plan it's going to cost you - a BIGLAW associate - 34k a year in new taxes? First, consider yourself lucky to have such a job ESPECIALLY IN THIS ECONOMY.

Second, well, that wasn't exactly accurate - in fact, if you make the usual 160k/year your taxes won't change much except for a maybe a thousand or so more in additional social security taxes (those ATL figures, in case you were wondering, were for a 5th year associate - and is not entirely accurate anyway . . .), depending on what Obama does with raising the payroll tax cap and some maths.

Third, coming to the main point and dispensing with the akward incipit, what Obama really wants to do is *modestly* raise the highest marginal tax rate - the rate that people pay on each dollar of additional income earned - from the paltry 35% it is now to a few points higher. This, as his campaign has repeated ad nasuem, does not affect you if you make less than $250k/year.

I bring this up beacuse the Nation had some great graphical representations a few months ago of what, exactly, exactly a 35% MTR means:



Our take: We need to spread the wealth around. The simple fact is that the gap between the rich and poor in this country is getting brighter all the time. Simply, tax rates are low right now and raising them could not only be used to directly help those in need but also to rebuild this country's crumbling infrastructure and correct many (well some) of the mistakes of the Bush administration that turned respectable surpluses into massive deficits.

So, yes, Obama will raise taxes. Yes, we really need the money for many things (even though overall federal revenue actually might not change that much; that's a story for another time . . .). And yes, if you make $250k ++ (ed. OK people, 200k+ for individuals, it seems like this is where the 2% income tax surcharge is coming in) you will still be wealthy. Some how we think making 62.5 cents on the excess dollar instead of 65 will still leave people with some motivation to work. As for raising the social security tax; that's pretty much inevitable if you want keep social security, and I don't think anyone believes that getting rid of it is a realistic option . .

There are worse things than paying taxes. Like pointless wars, a sputtering economy, an energy crisis, . . .

8 comments:

Anonymous said...

it's 250k for a HOUSEHOLD not per person. i guess we better not marry other law students, unless they go to a firm that pays less than 90k.

Anonymous said...

pretty sure its 125k/single person so marrying another lawyer wouldn't help (and wouldn't hurt) but marrying someone making a lot less would

Anonymous said...

Pretty sure it's $200,00 as a single person, and $250,000 as a couple. So, if you marry a lawyer, chances are you'll be above that level. And, even if you don't, it won't be long before you pass that threshold.

Don't get me wrong. There are plenty of good reasons for lawyers to vote for Obama. With respect to taxes, however, we'll just have to show our patriotism.

Rule 12 (f) said...

it's 200k single person / 250k household according to the tax policy center.

paying taxes is patriotic, titcr.

Anonymous said...

Obama apparently has done a great job of confusing the issue. Nobody, including Biden (who said 150k), seems to know what the income threshold is (150k if single? 200k if divorced? 250k if married? 300k w/ a dog?). I have a suspicion that it'll be at the lower end of the ranges.

I think it's sorta mean to say that the poor aren't patriotic. Since they don't pay any taxes, they must not be.

Rule 12 (f) said...

Working poor pay social security taxes, etc. They "pay" income taxes in the sense of EITC. And everyone pays sales taxes. . .

Anonymous said...

Let's be honest, most law students have never done anything more than hold down a summer job or two. It's a little unseemly to start griping and moaning about how, once we join the ranks of the top 5% richest people in the richest country in the world, we might have to pay a marginal income tax rate of 39.6% instead of 35%. Oh, the horror! Somebody call a WAAAAAAHmbulance!

Anonymous said...

i for one will not be motivated to work any more if the MTR goes up